1. Hoover and the Depression
The Crash of 1929
Hoover and the Depression

2. Hoover’s background Self-made man - a millionaire businessman
WW I food administrator
Chairman of American Relief Org.
Member of Harding’s cabinet
Held no elective office until Presidency
Hoover was orphaned at a young age.
He put himself through Stanford U. and made a fortune as a mining engineer in China and Australia.
During WWI, he served with distinction as Wilson’s Food Administrator, an accomplishment that landed him a job as Secretary of Commerce under Harding and Coolidge
Hoover was by no means ignorant of the plight of the poor and homeless.
Following WWI, he was appointed Chairman of the American Relief Organization, an agency that sought economic restoration in Europe.
When the agency was disbanded, he went on to form the European Children’s Fund to care for millions of orphaned children in Central and Eastern Europe.
When he became the Republican nominee for president in 1928, Hoover had never held an elective office.

3. Hoover on prosperity in 1928
“We live in a day when poverty will be banished from this nation.”
Campaign speech, 1928
“Capitalism has matured. We will never have another depression.”
Hoover, 1928
“A chicken in every pot & two cars in every garage”
Republican slogan, 1928 Campaign

4. Hoover’s Bull Market of 1929
During 1st 6 mos. of Hoover admin.
Height of stock prices
Aug. 1929, 300 billion shares bought on margin
“Get rich quick” gamble
Money normally earned off dividends
Margin buyers looking to buy low then sell high
Only works if stock price goes up!
Hoover’s Bull Market of 1929

5. The 1929 Stock Market Crash

6. The Causes Over-production in industry Uneven distribution of wealth
Output > consumer purchases
Uneven distribution of wealth
Trickle-Down theory failed
Mechanization in industry cut jobs
Farm income  = supply > demand
Unsound banking practices
Default Closures  Lost Savings

7. The Causes
Over-speculation in real estate / margin buying in stock market
Prices driven to unrealistic levels
Foreign Economic troubles
Poor Euro economies  reduced purchases of U.S. goods
U.S. tariffs reduce sale of Euro goods  default on loans

8. The Causes International Debt Structure Euros owed $ to U.S. banks
Reparations supposed to help
U.S. refused to forgive debts
U.S. banks loaned $ to Euros
Created more debt
Tariffs made earning $ harder
Euros defaulted on loans

9. Black Tuesday - The Crash
Fear of falling stock prices feeds a major sell-off
Oct. 24, Black Thursday
13 million shares traded
bottom falls out of the market
Oct. 29, Black Tuesday
16 million shares - market dies
$30 billion in stock gone by 11/14

10. Consequences of the Crash
Within 1 year - 1,300 banks failed
5,000 more within 3 years
9 million savings accounts vanish
85K businesses & factories closed
Unemployment (25%!)
Mortgage foreclosures
400K farms lost
Collapse of foreign markets